Question

Planet Company had operating income of $12,000, average operating assets of $125,000, and sales of $45,000. What is Planet's return on investment (ROI)? (Note: Round answer to two decimal places.)

Answer 1

Return on investment can be given by


`(Profit)/(Cost\ of\ goods\ sold) *100\%`

Given that the profit is $12,000 and sales is $45,000. Thus, the cost of goods sold is given by $45,000 - $12,000 = $33,000.

Therefore, the return on investment is


`(12000)/(33000) *100\%=36.36\%`